Interbank rates fall as MAS injects more funds into jittery market

Source : Straits Times - 1 Oct 2008

THE Monetary Authority of Singapore (MAS) joined other central banks and injected more funds into a jittery money market spooked by the failure of a US bailout package.

Singapore’s central bank said in a statement last night that it had increased liquidity in the local money market through its market operations.

‘As (Singapore dollar) funding activities picked up into the quarter-end, Sibor rates came under some upward pressure. MAS has responded by keeping a higher level of liquidity in the banking system,’ it said.

The MAS also said that it will ‘continue to anticipate the market’s funding needs, and will consider on a case-by-case basis any unique liquidity needs of individual banks’.

Singapore’s money market rates fell yesterday, with the one-month interbank offer rates (Sibor) dropping to 1.85 per cent from 2.06 per cent on Monday, retreating from last Friday’s nine-month high of 2.275 per cent.

Traders said that overnight rates also fell to 0.875 per cent yesterday from 2.125 per cent on Monday.

MAS said that it has been monitoring developments in global financial markets and the impact on Singapore’s markets and financial institutions.

It also assured investors that financial institutions here are ‘functioning normally’ and have ‘enhanced their risk management measures given the uncertain market conditions’.

In anticipation of tighter lending conditions, MAS said that it has expanded its standing facility to all banks - which subscribe to its electronic payment system (MEPS+) - to provide assurance that they can readily access central bank liquidity ‘when required’.

Singapore shares closed steady after recovering from sharp intraday losses.